How to value your spending to accelerate goals
Having a life and / or financial goal is important. It brings focus. But focus without action means little. Like having a map and refusing to move.
A major money mistake is having goals yet not translating them into today’s action. Yes, enjoying today while building tomorrow means compromise, but it’s also illuminating to assign value to the things we spend our money on.
Imagine your A-1 financial goal is to buy your first house. Just stating that goal is a vital and clarifying action. From there, it’s time to focus attention and how it plays day by day.
It’ll all end in beers
Let’s take the ancient British tradition of Friday night beers. Every week you head to the Dog and Duck to drop £30 at the bar and gossip about colleagues.
A great time is had by all but that £30 per week spend equals £1,560 per year or
- 5% of the average home deposit
- 15% of a dent in £10,400 – the average non-mortgage debt for 18-34 year olds
- Roughly enough to cover the year’s utility bills
It all matters. But the beauty of connecting today’s actions and tomorrow’s goals is that it brings our spending into the light. It keeps us accountable and lets us scrutinise what enjoying today really means.
You might say Friday beers are precious. Untouchable. Valued social time. That’s no problem at all – let’s trim elsewhere. Can you cycle to work or bring in lunch? Great.
A task and three questions
Here at Money Means we help you get clear on where you spend your money and, crucially, why. Building tomorrow needn’t mean sacrificing enjoyment in our social, emotional and physical lives. Your plan can simply dial back on low-priority spending.
To help you focus your spending on areas that matter we suggest you review each transaction from the last two months and ask yourself:
- Did I need this, or want this? So often we kid ourselves that a want is a need yet developing spending awareness is key to changing behaviours.
- Does this expense align with my values and / or goals? When spending ties into our values then we enjoy it more than spending which doesn’t add positivity to life.
- How could I have better spent this money? Look at expenses which weren’t needs or enjoyable and ask yourself: what could I have done with this money instead?
Think about the above and use this exercise to move closer to your goals.